Microsoft's new day in court

WilliamL. Watts

WASHINGTON (CBS.MW) -- Microsoft on Wednesday gets its chance to tell a federal judge exactly what it feels is wrong with a government proposal to split the software giant in two.

Microsoft
MSFT, -0.35%
must file its initial response to the government proposal, but has indicated it will seek to extend the remedy phase of the trial in order to more closely examine and rebut the breakup plan.

U.S. District Court Judge Thomas Penfield Jackson will ultimately decide on a remedy. Although Jackson found that Microsoft persistently violated antitrust laws, there is no guarantee he will grant the government?s request to split the company in two.

Even if Jackson opts for a breakup, the company wouldn?t be split until after Microsoft exhausts its appeals. And Microsoft has made clear it plans to appeal the judge?s findings.

In the meantime, however, the company will seek to show the judge that even if his conclusions of law hold up, the government?s proposed breakup plan goes too far.

"We are going to put together a good faith recommendation on the steps that would address the specific violations found by the court, although we may disagree with those findings," Microsoft spokesman Mark Murray told CBS.MarketWatch.com earlier this week.

"We believe that the government?s proposals are completely unprecedented and far, far outside the scope of the case. So, in contrast to the government?s recommendations, our papers will actually outline remedies that fall within the scope of the litigation and address issues identified by the court."

The proposal filed on April 28 by the Justice Department and 17 states seeks to break Microsoft up along product lines. One company would consist of the Windows operating system, while the other would be made up of the company?s applications software businesses and Internet operations.

The government contends such measures will eliminate Microsoft?s ability to abuse its Windows operating system monopoly. The breakup would foster competition in the markets for operating systems and applications software, the government argued.

Two states -- Illinois and Ohio -- broke with the other plaintiffs, arguing for restrictions on Microsoft?s conduct followed by a breakup only if the company doesn?t comply.

News reports said Microsoft?s counterproposal will outline a number of conduct restrictions, including measures that would require it to provide equal pricing to all customers for its Windows software and requirements that it open its Windows software code to its partners.

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